Web of Shell Companies Veils Trade by Iran’s Ships

Published: June 7, 2010

On Jan. 24, 2009, a rusting freighter flying a Hong Kong flag dropped anchor in the South African port of Durban. The stop was not on the ship’s customary route, and it stayed only an hour, just long enough to pick up its clandestine cargo: a Bladerunner 51 speedboat that could be armed with torpedoes and used as a fast-attack craft in the Persian Gulf.

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Top, Chris Perkins/IHS Fairplay; Daniel Ferro/IHS Fairplay

A ship named the Iran Mufateh, top, was openly operated several years ago by Irisl, the Islamic Republic of Iran Shipping Lines. Two name changes later, the ship was called the Amplify, bottom.

The name painted on the ship’s side as it left Durban and made for the Iranian port of Bandar Abbas was the Diplomat, and its papers showed that it was owned by a company called Starry Shine Ltd. Both the name and provenance were of recent vintage. Six months earlier, the Diplomat had been the Iran Mufateh, part of a fleet owned by the state-owned Islamic Republic of Iran Shipping Lines, known as Irisl.

Within months of the Durban episode, the United States government put out word that Irisl had renamed the ship and set up Starry Shine to evade American export controls aimed at preventing Iran from obtaining military-use technology like the Bladerunner 51.

By that time, though, the freighter had yet another name: the Amplify. Last spotted by an electronic tracking system this April in Karachi, Pakistan, the Amplify was under new management and had a mysterious new owner.

But only on paper.

The Mufateh-Diplomat-Amplify is part of a great disappearing act, in which Irisl, under pressure from American and other sanctions, has been obscuring the true ownership of its vessels in a web of shell companies stretching across Europe and Asia, a New York Times examination of Irisl’s actions shows.

Formed mostly after the United States blacklisted Irisl and all of its ships in 2008, as confederates of Iran’s nuclear and ballistic-missile programs, the corporations often have English names like System Wise and Great Method, which seem to mock American resolve.

Now, as Iran continues to defy international calls to rein in its nuclear ambitions, the United Nations Security Council is poised to vote, as soon as this week, on sanctions of its own. Several provisions focus on Irisl, which has been determined by the United Nations to have been involved in a plot to smuggle weapons, in violation of an international embargo that prohibits Iran from exporting arms.

But an examination shows how Iran has used a succession of stratagems — changing not just ships’ flags and names but their owners, operators and managers, too — to stay one step ahead of its pursuers. This cat-and-mouse game offers a case study in the difficulties of enforcing sanctions.

“We are dealing with people who are as smart as we are, and of course they can read our list,” said Stuart A. Levey, the under secretary of the Treasury who oversees the sanctions effort and the blacklist of Irisl and its fleet.

That blacklist simply hasn’t kept up.

Of the 123 Irisl ships listed, only 46 are still clearly owned by Irisl or its United States-listed subsidiaries, according to an analysis of data from IHS Fairplay, formerly Lloyd’s Register-Fairplay, based in Britain, which issues large merchant vessels their unique identifying numbers and tracks them over their lifetime. Four more were scuttled.

The rest — 73 — are now on record as owned and operated by companies that do not appear on the blacklist. The companies are located far from Iran, in places like Malta, Hong Kong, Cyprus, Germany and the Isle of Man. In all but 10 instances, however, records and interviews established definitive links between the ships’ new registered owners and Irisl.

The companies are either run by Irisl officials, set up at their behest or wholly owned by Irisl, corporate records and interviews show. Most of the companies’ ships are now operated and managed by three newfound Iranian companies that can be found not at the addresses provided to IHS Fairplay, but at Irisl facilities in Tehran.

The Amplify’s registered owner, for instance, is a Hong Kong corporation called Smart Day Holdings, which in turn lists as directors a company in Samoa and another on the Isle of Man. The Isle of Man company, Shallon, is part of a network set up with the help of Nigel Howard Malpass, a British shipping consultant who serves on the boards of Smart Day and companies connected to 43 other ships previously registered to Irisl, records show.

And the shares of many of those companies are held by yet another Isle of Man company, Woking Limited, which records show is wholly owned by none other than Irisl.

“I did used to be involved with Irisl,” Mr. Malpass said in a telephone interview, adding that while he had set up companies at the company’s behest, he had since “disassociated” himself.

Irisl, for its part, has repeatedly denied improperly aiding Iran’s military and nuclear programs. Iran’s Ports and Shipping Organization declined requests for an interview about the company and its transformations.

Trying to Keep Up

In recent months, advocacy groups like Iran Watch have raised questions about Irisl, particularly its practice of changing ship names. But The Times’s findings offer a considerably more extensive picture of the way Irisl has adapted to sanctions — one that goes well beyond the knowledge of even the Treasury Department.